Mortgage Glossary

C

Closing Costs

Costs, in addition to the purchase price of the home, such as legal fees, transfer fees and disbursements, that are payable on the closing date. Closing costs typically range from 1.5%-4% of a home's selling price.

Closing Date

The date on which the sale of a property becomes final and the new owner takes possession.

CMHC

Canada Mortgage and Housing Corporation. A Crown Corporation that administers the National Housing Act for the federal government and encourages the improvement of housing and living conditions for all Canadians. CMHC also creates and sells mortgage loan insurance products.

Collateral Mortgage

A mortgage which secures a loan by way of a promissory note. The money which is borrowed can be used to buy a property or for another purpose such as home renovation or for a vacation.

Commitment Letter/ Mortgage Approval

Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

Conditional Offer/ Conditions of Sale

An Offer to Purchase that is subject to specified conditions; for example, the arranging of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.

Conventional Mortgage Loan

A mortgage loan up to a maximum of 80% of the lending value of the property. Mortgage loan insurance is not required for this type of mortgage.

Covenant

A clause in a legal document which, in the case of a mortgage, gives the parties to the mortgage a right or an obligation. For example, a covenant can impose the obligation on a borrower to make mortgage payments in certain amounts on certain dates. A mortgage document consists of covenants agreed to by the borrower and the lender.